The construction industry in Germany experienced a considerable contraction in February, albeit at a slower rate than in January, according to data released by S&P Global on Wednesday. The Purchasing Managers' Index (PMI) for the construction sector rose to a five-month high of 39.1 in February, an improvement from January's figure of 36.3.
Notably, a PMI score below 50.0 signifies a contraction in the industry. This ongoing trend of decline in Germany's construction sector has been in effect since April 2022.
When it comes to the three broad categories of the index, the rate of decline slowed across the board. Civil engineering activities only experienced a slight drop. Meanwhile, both the housing and commercial sectors saw a significant contraction, albeit at a lesser rate. On a positive note, the latest data marked the smallest decrease in new work in six months and the lowest drop in employment since July of the previous year.
The survey also highlighted inflationary pressures, with the rate of input price growth hitting its highest level since March 2023 due to supply bottlenecks and increased toll charges being passed onto customers.
Despite these findings, the outlook among constructors for the year ahead remains glum, with economic instability and domestic politics predicted to pose further challenges.
